International Journal of Research in Engineering, Science and Management 172 Volume 4, Issue 5, May 2021 https://www.ijresm.com | ISSN (Online): 2581-5792

Flawed Business Model Led Closure of Stationery Retailer Papyrus

Subhendu Bhattacharya1*, Sona Raghuvanshil2 1,2Amity Global Business School, Mumbai, India

Abstract: Papyrus, famous for greeting card and popular in year 1973. There was special focus on meticulous dexterity and Northern America as leading stationary chain closed down its artistry for its products and it kept on excelling in layout, quality operation in June 2020. Papyrus was brought into existence by and sophistication of varied offerings. It eventually reached its Marcel and Margrit Schurman in 1950. It had a roaring business since its inception. Papyrus expanded during its heydays and set prime and brought American Greetings, Carlton Cards and up over 500 stores across northern America. But organization Paper Destiny under the wings of Schurman ownership. failed to maintain its glory in digital age. Consumer preference Papyrus and other brands commanded by Schurman, had and habits transformed significantly in technology driven time. greetings cards for all seasons and occasions. There was strong Digital-based subscriptions, online greetings, instant messaging, patronage for its craftmanship, design and aesthetic value. pervasive use of social networking sites, social media made a During growth phase, Papyrus made its presence felt in more severe dent in demand for greeting cards. Generation Y and Z are more into sending smileys and emojis to convey feeling and extend than 500 locations in northern America. But it failed to keep up greetings. Even calendar, planner, schedule have mostly shifted to the momentum in 21st century. They failed to realize that digital mode. Papyrus overlooked sign of new habits across dynamics of exchanging greetings, extending wishes and generations and continued with physical store, greetings card, gift conveying messages changed to a great extent. Millennials and products and stationary items which were not viewed as Gen Z got something faster and easier to interact being environment friendly. Over the years, footfall reduced to Papyrus equipped with digital devises, Wi-Fi connectivity and internet stores, revenue plummeted and it ended up filing Chapter 11 for bankruptcy protection in USA Bankruptcy Court in Wilmington, network. Digital disruption hit hard to paper based physical Delaware. The closure of Papyrus stores in 2020 resulted in mode of greetings. Online greetings card became popular with unemployment of roughly 1,100 salaried and hourly workers. its creativity, inexpensiveness and faster delivery. Papyrus failed to grasp the paradigm shift happened in greetings Keywords: Digital preference, Erroneous strategy, Greetings business and was compelled to close down physical stores being card obsolescence, Insolvency, Managerial indecision, Stationary uncompetitive and inappropriate in modern world. Business, Shrunken margin, Shift in consumer choice. 2. Case Presentation 1. Introduction Papyrus has its share of journey from boom to bust. Fairfield, Old habits have faded down and given way to new practices California based Schurman Retail Group founded Papyrus in in the 21st century. Change is law of universe and it’s a blunder 1950 that specialized in stationary products, gift items and to turn a blind eye towards evolving trends. Obstruction to greetings card for every occasion. Papyrus became subsidiary change mostly leads to retarded growth and losing track of of Schurman Retail Group established by Margrit Schurman progress. People of 21st century live in fast paced digital world and Marcel Schurman. At the outset of business, Marcel and rely profoundly on digital devices and information Schurman Company as it was known in 50s used to import from technology. Exchange of communication is on fast-track in Europe and wholesaled classy greetings cards and stationary business domain, public affair and personal relationship. People items. Company fared well and expanded capacity with are not oblivious about nostalgic charm of writing letter and commencement of warehouse, packaging unit and sending greetings card but paucity of time drove people to adapt administrative office at Oakland, California in 1965. First something time tested, effective and economic. Papyrus missed Papyrus retail store was inaugurated in Berkeley, California in the vital point in their business process and paid heavy price for 1973, It earned a name and received strong patronage from flawed business model and business indecision. buyers and admirers who purchased and praised the finest Papyrus commenced its operation in 1950 with enterprising craftmanship and exquisite offerings in the form of greetings endeavor by Marcel and Margrit Schurman. In the beginning it cards, gift package and birthday decorative. Company started was limited to being importer of elegant paper products from internal design studio in 1982 and shifted its status from Europe and wholesaler of expensive and conspicuous greeting importer to publisher. Dominique Schurman took charge and cards and stationery in USA market. It joined the retail foray donned several hats before ascending to CEO stature. Company with opening up of Papyrus store in Berkeley, California in the

*Corresponding author: [email protected]

S. Bhattacharya et al. International Journal of Research in Engineering, Science and Management, VOL. 4, NO. 5, MAY 2021 173 went into franchising retail store business in 1993. It catapulted resulted in slimmer margin and truncated profit. Over the years, its progress with ‘store within a store’ concept in 1999 in company grappled with difficulty of higher product cost, capital collaboration with Macy’s, Marshall Fields, Borders Books. expenditure for renovation and upkeeping of stores necessary Distribution center was shifted to Nashville, Tennessee in the for in-store experience for elite customers. Business model same year and corporate office found its place in new building. didn’t support diversification of products, customization in Papyrus found a new Hummingbird logo in 2006 that offering, exploration of digital avenue and collaboration with symbolizes delicate dexterity and perfection and clubbed other groups. All missed exercise could have cushioned bottom together wholesale, retail and assorted products for better line of business. In stark contrast, Hallmark Cards Inc., which control. Papyrus spread out across USA to make its presence controls 40% of the market share diversified business model so felt in key markets. Papyrus floated its online concept with well and reaped the benefit of high ownership stake in Crown launch of PapyruSonline.com in 2007. Company went into Media, ownership of Crayola and partnership with nonprofit consolidation with acquisition of Carlton Card Retail and enterprise Carring Bridge. Plunging demand for Papyrus divested wholesale division to American Greetings. In year merchandises and lack of business diversification led a soaring 2010, Papyrus explored beyond boundary and founded first liability that stood 40% higher than its assets. Absence of Papyrus retail store in Canada at Calgary, Alberta. Papyrus prospective buyer and denial of supplier to provide necessary focused on physical presence and went ahead with launch of resource material, left no choice but to close down its iconic Papyrus Cherry Blossom Vintage stores in 2012 and Paper stores across 254 locations of USA and Canada. It came as a Destiny at in Ottawa, Canada and Seattle, Washington in 2013. real shock to ununionized over 1000 employees who rendered There was emergence of grandiose Papyrus Niquea.D flagship jobless with filing of bankruptcy protection under Chapter 11 store at New York in the same year. There were two innovative by Papyrus retail business in US Bankruptcy Court in approached to draw attention of people and usher in more Wilmington, Delaware. footfalls in two consecutive years such as Papyrus Perks Program and Papyrus Little Treasures concept store plus circle 4. Conclusion of celebration to felicitate team performance at exotic store Nothing lasts forever. It is applicable to business operation venue in year 2014 and 2015 respectively. All these ingenious which runs short on change management and foresight. Starting efforts did not bid well. They failed to receive more footfalls from import business, Schurman paper business and greetings and generate higher revenue. Papyrus joined the bandwagon of card sale grew exponentially. It successfully served people with retail apocalypse along with Fairway Market, Forever 21, A.C. refined taste and penchant for exquisite piece of art. Papyrus Moore, Barney's, Pier 1 which failed to withstand the assault of rode the crest of time and thrived with elegant offerings of pandemic and economic contraction. greetings cards, stationary items and gifts suitable for various occasion. All merchandises on offer were stylish, fancy, itched 3. Discussion the pride of giver and gratified receivers with eye for Schurman Retail Group and Papyrus retail business delayed craftmanship. But it missed the signal of transformation during to comprehend that business dynamics changed to great extent digital age and went off the track. Economic recession of 2008 since technology boom happened in last couple of decades. In made people price conscious and spendthrift. People cut down its progressive time, Papyrus was instrumental in gifting heavily on conspicuous consumption. There was change in moments of joy and created a ripple of splendor during trend in the developed society and shift in behavior of people. celebration of numerous occasions. There was noteworthy Digital network, smart devices, web-based services brought brand loyalty and patronage for elegant offerings by Schurman plethora of options to exchange greetings and interact in time- run business. Since 2008, business was on a slippery track. saving and economic way. Millennials and Gen Z didn’t care Economic recession knocked hard and sounded the alarm bell. much about physical exchange greetings, wishes and Business struggled hard to recapitalize or sell its operation in salutations. Economic slowdown and pandemic restriction dealt 2019. In December 2019, suppliers terminated its accord with heavy blow to retail business. Footfall thinned out and top line Papyrus on the pretext that Papyrus would default on its deal. growth turned out to be a distant dream. Brick and mortar As per US census Bureau analysis of 2020, revenue slid down business across the board kept fighting a tough battle in the time by 2.7% for greetings card since 2015 and projected negative of digital revolution. Many were forced to closed down as growth to the level of 2.4% for next four years. In consumer physical stores failed to lure away customers with window driven economy, retail business was not overlooked or ignored dressing, façade makeover or ravishing interior decoration. It is totally. Except food service, gas station provision and time for course correction and getting back to drawing board automobile facility, remaining retail trade ended on a positive where retrospection and deliberation can help to figure out note in US in 2019. So, piling blame on industry downturn or whether hybrid model would auger well or it would be apt to decadence of retail business would be unjustifiable. Tennessee- take complete digital diversion. Writing on the wall is clear that based Papyrus, famous for premium greetings card and gift dependence on mere physical retail shop is not a viable option items faced severe jolt when extravagant expansion of stores and may spell a doom for the business which has digital went awry in the backdrop of recession in 2008. Papyrus substitutes. couldn’t overcome the onslaught of recession. The spike in expense on paper, rise in rent and decline in customer demand S. Bhattacharya et al. International Journal of Research in Engineering, Science and Management, VOL. 4, NO. 5, MAY 2021 174

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